Here's How Nike Is Turning Data into Unrivaled Customer Experiences
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There isn't much sportswear giant Nike doesn't know about its customers. When Nike app users walk into its flagship store in New York City, the company knows who they are, what sports they're into, what sizes they wear, and what colors they prefer. All this information is crucial to a brand that wants to deliver personalized customer experiences at every turn - be they digital experiences, in-store experiences, or both - and Nike is committed to doing just that.
Like many brands, Nike uses its apps - including Nike Training Club, Nike SNEAKRS, and the Nike app - to collect customer data. This data can then be transformed into valuable customer insights and used to help the brand decide which designs to produce and what items to stock in which stores. It's also used to customize what each customer sees in their apps in order to increase engagement and personalize as much of the shopping experience as possible.
All this focus on data is representative of a certain shift in Nike's business model over recent years. For decades, Nike has operated a retail-first model - where the majority of its revenue is generated via wholesale. This hasn't changed necessarily - wholesale still represents the bulk of the company's sales. However, the company's direct-to-consumer initiative, Nike Direct, contributed $10 billion in sales during 2018 - a figure that's projected to increase to $16 billion by 2020.
(Image source: wsj.com)
Nike's success with going direct to the consumer comes down to how the company is using data and analytics to deliver a better customer experience. The Nike app, for instance, provides users with access to the Nike+ rewards program, which offers personalized exclusives to members, early access to new products, priority access to events, and personalized workouts.
Then there are things like the Nike Training Club and Nike Run Club apps, which track workout and running statistics and provide users with audio guides during training sessions. The added value that these innovations bring to the customer experience deepens Nike's relationships with its customers and encourages them to buy directly from Nike - as opposed to, say, Amazon or Nordstrom, where the same products are equally available. "We look at our app ecosystem as really providing content, community, activity and connection for our consumers, even beyond the transaction," Heidi O'Neil, President of Nike Direct, told The Wall Street Journal in a recent interview. "We're seeing results in North America. In the third quarter, our apps represented over 60% of our digital business."
Nike also utilizes this data to inform its physical retail location strategy. O'Neil explained that the brand uses analytics to understand where Nike members are concentrated. "It helps us pick our Nike-branded retail locations in places that can serve not just as stores but serve as hubs for our members and service centers," she said. "We also use data to select and curate the product in the stores. We'll know if a neighborhood or a market is really popular for running, training, or let's say sneaker culture. Then, of course, we use data to understand what's selling."
Nike has been able to build out these capabilities in large part due to a number of key acquisitions the company has made in recent times. Last year, for instance, Nike acquired leading data analytics company Zodiac. Zodiac's technology allows Nike to crunch together data points from customers using Nike apps - as well as other connected devices such as Fitbits - to gain insight into customer habits and predict purchasing decisions. For example, if a customer usually replaces their running shoes every six months but it's been twelve months since their last purchase, Nike will know that it's time to reach out with a personalized offer and prompt that customer to resume their purchase cycle.
Also last year, Nike acquired Invertex - a 3D-scanning company that specializes in using automation technology to build consumer and medical devices. Invertex has since designed Nike Fit - a new scanning technology that uses a proprietary combination of computer vision, data science, machine learning, and recommendation algorithms to find customers' "perfect fit" for each Nike shoe style.
(Image source: nike.com)
Accessible in the Nike app as well as select retail stores in the US, Nike Fit prompts users to use their smartphone camera to take a scan of their feet. The app then automatically provides a recommended size range for that customer. This sizing information is subsequently stored within that customer's Nike+ profile and used to suggest sizes when the customer shops for shoes both online and in-store.
This helps remove one of the biggest friction points that come with buying a new pair of sneakers, said O'Neil. "You see consumers ordering multiple sizes. The No. 1 conversion driver on a digital experience is if you have my size and style. Now that we have the right fit information, that's going to help us with our depth of buys. We'll know whether we have the correct product and size."
One of Nike's greatest strengths has always been that it doesn't wait for competitors to come along and disrupt its business. Rather, it is constantly disrupting itself - and its renewed efforts into its direct-to-consumer model are the latest example of this commitment. Nike is still looking to win with its products, but it's also looking to differentiate its brand based on service and superior customer experiences enabled via data and technology. With new features like Nike Fit, Nike is aiming to make it easier for customers to shop in stores, online, and in the Nike app, while simultaneously providing the brand with even more data to better personalize the customer experience in the future.
"What's important from a Nike shopping experience is that with machine learning and AI, we're able to have every digital experience at Nike be unique and personal," said O'Neil. "My wish for you one day is to feel that you have your very own personal store curated for you on our app experiences."